It may not be easy but I've seen very tricky issues resolved using the methods I advocate...

Jo O'Sullivan

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Arbitrate or else!

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Arbitrate or else!

 JO: I am joined in this blog by Robert Williams a director at Family Law Partners, a financial arbitrator and Deputy District Judge.  So, Robert – I have been really annoyed lately with other solicitors not taking up Arbitration to obtain an award instead of going to court.  A couple of cases whereby the threat of court has been constant and a source of stress. All we are doing is trying to sort out the finances for a family – it’s not world war three!   I would just love it, if when we can’t agree on a fair financial settlement I was greeted with a YES to the suggestion of Arbitration.  Robert, is this your experience too?  If so, what do you think solicitors are afraid of?

ROBERT: 

Hi Jo, that is a really interesting question, but before I share some thoughts let me pick up on you being “annoyed”. I think that's a really interesting reaction and – correct me if I'm wrong – but it comes from a place where you absolutely want the best for your clients, you can see that an agreement is not going to be easy to negotiate and resolve, and all you want to do is to create a bespoke package for both clients (and I think is really important to emphasise that it's for both parties) that will lead an experienced third-party who should have all the skills to make a sensible decision about what happens to their assets or the issue that they need resolving in the most cost-effective, private and streamlined way as possible. And against this you get pushback.  I agree it is frustrating.

So I definitely share your experience.  In fact I was speaking to a couple this week where one of the parties was effectively saying that their lawyer was creating blockages to even talking about arbitration. These include that it was a “new process”, that they had “no experience of it and they would need to “hand the client over to someone else to deal with it” and so forth. I did mention that they might want to ask their lawyer what would happen if a new set of rules came in and how they would manage their practice in those circumstances!  The answer is they would pivot, they would learn and they would grow professionally. I accept that change can be really hard for some people to manage, but I think we can get to embedded in what we are used to doing. Was it Henry Ford who said words effect that if you do what you always did you will get we always got? Don't clients deserve more Jo?

JO: Yes, or Albert Einstein who is widely credited with saying, “The definition of insanity is doing the same thing over and over again, but expecting different results.”  We know that the court isn’t working well. There are delays and last minute cancellations; I can’t imagine that will change for some years to come, if ever. For me court is the option for those who are trying to preserve the person or the asset. Or where one person will not deal with the process at all. Or when one parent won’t let the other parent see the child but see preservation of the person! Then, by all means go to court. But otherwise, our clients need us to consider what would – as you say – suit them both.  There are more changes of practice and rules coming our way.  Here is my list of predictions:

  1. The court will become the preserve of the extreme case (see above)
  2. Cases where there is domestic abuse or when the local authority have concerns about a child will be the priority
  3. There will be more transparency in court with journalists being allowed to report, as new norm.
  4. The court will become more inquisitive (less adversarial) making the use of lawyers less necessary…

Lawyers will have to, as you say, pivot and be more agile in what they are doing. Just writing letters and preparing for court will not cut it.

I wonder if some won’t use Arbitration because they are afraid of choosing an arbitrator who goes against them? Or maybe they believe that they can’t ‘appeal’ an arbitral award.  What say you?  

ROBERT that’s interesting Jo. Let me deal briefly with the issue of an appeal first.  A recent decision (Mr and Mrs Haley etching their name in history for the wrong reasons: as an aside I wonder if Mr and Mrs Calderbank breathed a sigh of relief when the costs rules changed!) means the same test is applied when challenging both a court-based judgment and arbitral award. That worry has gone but should it remain ask your lawyer how many successful and costs proportionate appeals they have had in their careers. 

And as for the issue of choosing or being involved in choice of your “executioner“ surely we have already warned the client wanting to litigate that trite expression that “10 different judges may come up with 10 different decisions and all of them likely to be within the range of decisions the court could make” or that they are so worried the arbitrator will not do a profession. We can get it wrong Jo! 

And if that is not enough to persuade the cohort of cautious family lawyers, why not let IFLA decide who the arbitrator should be. I would’ve thought that a gender balanced list of experts able to arbitrate in the case - recognising that we are not living in a male dominated world - would be by far the best way of identifying your expert. After all, in the past, a DDJ regardless of their experience, may have been a conveyancer a personal injury lawyer for their day job and they not necessarily have the deep understanding required to assist parties to navigate through the nuances and complexities of family law.

So what tips and tricks do you use Jo to persuade the unconverted that arbitration is the right route? 

JO: In the face of the facts it’s hard to argue with. What are the facts?

  • Court is backlogged, could be public and gruelling
  • Arbitration is as quick as is appropriate
  • Arbitration is private
  • Arbitration is can be formal (as with court) or it can be more inquisitive and co-operative
  • Arbitration is very cost effective and can even be completed ‘on the papers’ with no need for the parties to attend and give evidence.

To be fair most of my clients are mediating or collaborating but the few that are ‘traditional’ all of my clients are up for Arbitration. I have never had a client say no.  Furthermore, it is possible to Arbitrate using Collaborative process and mediation (see The Certainty Project). Is it the way I sell it?

ROBERT: So let me get this straight Jo. There are options and how we communicate those options to our clients will influence the way the client proceeds. I think you’re onto something there! And thankfully you have and you will continue to beat the DR drum.  

But let me go back a stage. May I ask a question? Is arbitration a sign we’ve failed? Personally, I think there will always be cases where a decision is required. It might be what constitutes matrimonial property and what might then be shared. It might be determining the level and period of maintenance. For me the interesting point is do we wrap ourselves in the itchy comfort blanket of court (which I know you do your best to avoid) and have “all issues” litigation or do we identity what issues we can agree on and what’s in dispute and simply focus on determining the unresolved stuff. If you go to trial in court it’s about best foot forward and all bets are off. Most things are argued about. With the arbitral process if you agree how the net proceeds of sale of the family home are to be divided, what’s happening to the pensions etc why not refer any outstanding issue to arbitration. It’s quick, less expensive and avoids the collateral damage of a trial. My colleagues will tell you I often use the “sibling test”. I can almost hear the collective groan as they read this. What would I tell my sister? We’ve touched on it above, but other than some limited circumstances in a financial case I’d be steering her away from court (Jo I better be careful at this point as my bother in law was my best man, but to be fair I’d tell him the same). 

And as to the argument about paying for your arbitrator ask what can be saved in time and money if you avoid court? Our experience is the arbitral process is quicker and less expensive even with adding in your client’s share of the fee. 

Giving a real life example, I arbitrated a case where one party had an enforced return to the UK and a drop in salary. The move was in August. The firms involved dealt with the paperwork needed to focus on the issues very quickly, we had a day’s hearing at the end of September and a decision (the award) within 5 working days. They were unable to agree whether there should be a change let alone how much, so they needed a decision. That would have taken months and months through the court. And that means more time, more letters and increased costs. 

I also think we should remember being in the arbitral process doesn’t mean you have to stop trying to reach an agreement. Diverting into a private settlement hearing - like the financial dispute resolution hearing in the court model - can be very effective in reaching an agreement. We need to be able to course correct as we navigate towards trying to find solutions and outcomes for the client. 

Coming back to your “selling” point what do you think we can do as the family law options salespeople to educate clients and, for that matter, our peers?  And may I raise the elephant in the room. Litigation pays the bills. The longer the case lasts the more the lawyers make. With no margin of error how many solicitors’ letters did I see on the last trial I did as a DDJ (money case/listed for 3 days/costs c£150k between the parties)?

JO: There’s a lot there Robert, that’s for sure.  I agree wholeheartedly that sometimes, some people need a decision to be made for them. No shame in that and no we have not failed.  As you say most often we can narrow the issues. 

But it need not be as risky as going to court or Arbitration as you say – take a step back.  Practitioners ought never be afraid to take a step back. Doing a Private FDR is a brilliant example (or as you call it a private settlement hearing)  is where a neutral person (I’m shy of saying Judge as a Judge has a special and important meaning in our constitution) looks at the case and says that if they were ‘judging’ this case then this is what they’d order.  Actually very often they act as a bit of a mediator or ask questions about the parties proposals that trouble them and off we all go to sort something out.  Then we can ‘check in’ to see if we are on the right track. I’ve recently had the benefit of such a person and they charged just £3,000 + VAT and we had the benefit of their help for the whole day. Ultimately the parties were able to agree terms and sign off on a consent order, also on that day. Just imagine having a Judge at court waiting for you for a WHOLE day. That would never happen, it’s just a pipe dream.  

As for sales, aren’t we all actually sales people?  I’m selling my services every day. When I take a call from a prospective client or answer an query via my website.  So, the reality is that the lawyer must be ‘selling’ the idea of court. Given the costs consequences of issuing an application at court are really huge – that must take some selling! 

Counsel (a barrister) once told me that people ought to budget for spending between 1-3% of their gross wealth on proceedings. 

The problem is that firms are seeing litigation as not only a ‘cash cow’ but also that they can have bits of work over a long period of time (given the court is creaking) and thus keep the cash flowing.  And yes, it is lucrative. The trouble is it’s only a short term ‘win’. I suggest that it does damage to them as a firm or as a individuals; the word will get out that they are expensive and slow?  Unhappy clients and no recommendations.  

If I explain to a client the reality of what others are offering I get no push back.  They mostly want to sort things out the way I am offering. If they don’t then I refer them to firms that are content to work in this way.  I like the idea of a ‘sibling’ test. May we all apply it (unless we don’t like our sibling)….

Have the numbers of Arbitration gone up significantly because of COVID or have they been pretty stubborn?  I note that soon it will be compulsory for Arbitrators to record their arbitrations with IFLA so at least we’ll have an idea of how many they are….

ROBERT: First, let me say I agree that we need to be careful in our use of language.  I used the term settlement hearing because that is the objective and yet we, as lawyers, tend to use the nomenclature used by the court.  And I agree that using the word Judge for the facilitator for these private hearings is fundamentally wrong.  These meetings are not about being judged in any event.  You are asking a third party to share their views and by using their skill and experience to try and facilitate a compromise.

My experience is enquires have gone up.  But I would like to ask the question why this is the case?  Is it because those asking for details embrace the process or is it because the issues with the court process, have impacted on cases being heard and a decision is needed in a timeline the court would not be able to accommodate?  The question I think should be asked is was the court the right process for the client to start off with or was it the choice because “that’s what lawyers do”.  Something like 45% of the population cannot name a dispute resolution method other than court.  If we don’t tell people as lawyer, who is? Our respective careers are built of educating clients (and dare I say it at times, other lawyers!) of the options. 

Turning back to the question that kicked this exchange off the key point – which I know you know and I know you are expecting me to comment on – is arbitration is consensual (although if you agree to a private FDR as part of the court timetable then you need to fulfil that commitment).  You and I might rephrase this “Although we have agreed issues ABC, as we have not been able to agree issues XY could we suggest we refer these remaining issues to arbitration to ensure we have a swift and cost effective resolution for [client’s first names].  Perhaps we can arrange to speak to work out what steps we can both take to resolve these issues as quickly as we can, but in the meantime I am sure we will both work on trying to reach a compromise ”.  As a respected local barrister is often heard to say at the start of the case when working with a new colleague “we are not going to behave like, our clients are we”.

One final question from me Jo, what will it take for arbitration to become the “new normal”?

JO: I am hoping that the following Judicial moves will help make Arbitration and other forms of ‘ADR’ the ‘new normal’:

  1. The recent decision in A v A (Arbitration: Guidance) 2021 which clarified that the family court system should give those considering family arbitration full confidence in the process as a right and proper alternative to litigation.
  1. The Road Ahead from Sir Andrew McFarlane, President of the Family Division (June 2020)

Paragraph 37 states:

‘In all Family cases, regard should always be had to alternative means of dispute resolution. At a time when it is clear that the court will struggle to cope with the volume of cases in a restricted working environment, it is all the more important that parties, legal advisers and the judiciary should have express regard to all forms of non-court dispute resolution (in accordance with rule 3.4 FPR 2010) including mediation, conciliation or arbitration. There will be many private law children cases or financial remedy case that may be resolved by one or other of these alternative means.’

  1. And of course, the Haley case you mention above.

It’s in all our hands. Clients and practitioners alike to make Arbitration commonplace.

ROBERT: Thanks for sharing those links Jo.  Very helpful.  May I also share the following links:

  1. IFLA you will be able to find the names of Arbitrators, information on how arbitration works and other resources, including an introductory guide.
  2. Resolution – you can find information about arbitration and the names of arbitrators
  3. Family Arbitrator – this is a great resource packed with information.
  4. Shamelessly, my firm's website about arbitration